UK: Data Protection And Sport - An Uncertain Partnership

Increasing numbers of sports clubs and bodies are using the
expertise of third party specialists, be it for websites, apps,
social networks or gaming platforms to interact with their fans
domestically and internationally. However, there appears to be a
disconnect in terms of understanding the legal requirements and
obligations the clubs are under when outsourcing (by way of a
licence) or selling a database to a third party. While data
protection is not the most exciting topic to many it is
particularly important with the Information Commissioner Officer
("ICO") having the power to levy significant fines of up
to Ł500,000 for breaches of the Data Protection Act 1998
("Act").

When outsourcing or selling a database there are a number of
considerations that a club may need to consider such as obligations
under existing agreements, intellectual property rights, valuation
questions and data protection. This article will briefly set out
the current rules and regulations in relation to data protection. A
case study concerning a hypothetical football club called St.
Cuthbert's FC will be used and the article will suggest a few
considerations that are likely to be included in such an agreement.
There are no additional or separate rules for data protection for
sports clubs as for other industries but recent conferences and
articles highlight an apparent gap between the law and the actions
being undertaken by clubs.

Current data protection laws

The current domestic law is the Act which came into force on 24
October 2001 and implemented the requirements of the EC Data
Protection Directive (95/46/EEC). The Act applies where there is
processing of personal data by a data controller who is either
established:

in the United Kingdom (or another European Economic Area state)
and processing the data in the United Kingdom; or

outside the United Kingdom (or another European Economic Area
state) but uses equipment in the United Kingdom for processing the
data.

Personal data is data that relates to a living individual who
can be identified from that data or through that data in
conjunction with other data and information which is (or is likely
to come) in the possession of the data controller. In practical
terms the two areas of data that would be of most relevance to St.
Cuthbert's FC are personal names and email addresses.

The Act is directed towards the "data controller"
which will be the St. Cuthbert's FC in a scenario where they
outsource the marketing function to a third party. The third party
would be the "data processor" as they are a person, who
is not an employee of St. Cuthbert's FC, who processes the
personal data on behalf of the club. Where St. Cuthbert's FC
chooses to sell the database to a third party they will cease to be
the data controller and this role will pass to the third party.
There are however requirements that need to be undertaken by St.
Cuthbert's FC when they sell the database, which if not
complied with can lead to a fine.

Data protection principles

Where the database contains personal data St. Cuthbert's FC
(or the third party where they take over as the data controller)
must comply with the eight data protection principles which are set
out in Schedule 1 of the Act, which can be found in full here. Below is a brief introduction to the six
principles which are the most relevant provisions to St.
Cuthbert's FC in this situation.

First data protection principle – fair and
lawful processing. Where St. Cuthbert's FC transfers
personal data contained within the database (this applies both to
an outsourcing or sale) one of the schedule 2 conditions must be satisfied, such
as the consent of the data subject (fan) to the transfer. The most
common and advisable method for St. Cuthbert's FC to obtain
this consent is by way of incorporating consent wording in an
agreement (e.g. terms and conditions used when signing up to use
the website) which are accepted by the fan prior to the collection
of the data.

Second principle - personal data can only be obtained
for specific lawful purposes and any processing of the data outside
of these purposes is prohibited. The fan (as data subject)
must be made aware as to the purposes for which their data is being
collected. St. Cuthbert's FC would need to state that the
intended purposes of the data being collected include providing the
data to third parties for the purposes of marketing for example. It
is strongly advisable that St. Cuthbert's FC would future proof
the accepted purposes for which they can use the data, as the
purposes do not all need to be undertaken as soon as the data is
collected.

Fourth principle - personal data must be accurate and up
to date. Therefore St. Cuthbert's FC may be required
by the third party purchaser of the database to give an indemnity
that protects the third party in the event that St. Cuthbert's
FC have failed to ensure the database is up to date or inaccurate
such as removing a fan's details upon request.

Fifth principle - personal data must not be retained for
longer than necessary for the purposes for which it was originally
processed. St. Cuthbert's FC are required to remove
data which is no longer necessary for example where the information
was only collected in anticipation of a one-off event e.g.
player's testimonial once this event has occurred St.
Cuthbert's FC cannot use the fans data for non-authorised
purposes. St. Cuthbert's FC would be well advised to obtain
permission to retain the data for the purposes of marketing when
collecting the data e.g. in addition to the processing of the
user's purchase of testimonial tickets. This would avoid St.
Cuthbert's FC having uncertainty as to whether use of the data
would be compatible with the purpose for which it was collected in
the event they wished to use it for marketing purposes. As with the
fourth principle a third party buyer will seek protection to cover
this legacy data from St. Cuthbert's FC.

Seventh principle - appropriate technical and
organisational measures need to be taken to prevent any
unauthorised or unlawful processing of, accidental loss or
destruction of or damage to personal data. Therefore it is
necessary to apply (proportional) encryption over and have adequate
back-ups of the data. In the case of St. Cuthbert's FC it would
be necessary to ensure that the personnel who have access to (and
ability to add to, alter or delete the data) and security over the
data is clear. The security should be both physical and technical
and be backed up with robust policies and procedures in the event
of a breach.

Eighth principle - personal data must not be transferred
outside the EEA unless the recipient country has an adequate level
of protection for data subjects, unless it falls under one of the
limited exceptions e.g. the data subject has consented to such a
transfer. Therefore it is important that St.
Cuthbert's FC ensures that the data is kept either within the
UK or the EEA when it is collected by themselves and when it is
transferred to a third party. Where the servers for the third party
are located outside of the EEA there may be additional
complications and requirements that need to be addressed.

Use of a third party

Where St. Cuthbert's FC does not have the knowledge,
capability or intention to conduct the marketing activities in
house they may seek to use an independent third party to handle
these activities on their behalf. Particularly in the digital age
clubs are more commonly seeking to hand over these activities to
industry experts. There are two common arrangements for this,
namely the sale of the database or the outsourcing of the database
to the third party.

a. Sale of a database

If St. Cuthbert's FC wishes to sell their database to a
third party they must make it clear to the third party for what
purposes the information was collected. As the third party is only
entitled to use the information for the purposes that it was
collected unless the information was originally collected (at least
in part) for the purposes of marketing the third party would need
to seek the consent of the fans prior to using it for marketing.
This is clearly a potentially onerous, time consuming and expensive
exercise for the third party to undertake. Prior to the sale of the
database St. Cuthbert's FC should undertake a review as to
whether they require the database for other services such as
ticketing as it would be somewhat unfortunate they could no longer
contact their own fans with offers on membership and tickets.

Where St. Cuthbert's FC decide that a sale is the best
course of action they are likely to be required to give warranties
to the buyer which may include that the:

Act has been complied with in all respects in relation to the
database at all times;

St. Cuthbert's FC is entitled to transfer the database to
the third party (purchaser);

Third party is entitled to use the database under the Act for
the purposes for which it intends to use it;

St. Cuthbert's FC has no notice of any complaints or claims
under the Act; and

St. Cuthbert's FC has had no notice that the ICO considers
that St. Cuthbert's FC has infringed any provision of the Act
in relation to the database.

b. Outsourcing of a database

An alternative option open to St. Cuthbert's FC other than
the sale of the database, which would retain ownership of the
database, is to outsource the database to a third party. This would
enable St. Cuthbert's FC to instruct the third party to
undertake tasks such as marketing, ticketing and administration on
St. Cuthbert's FC behalf. Where St. Cuthbert's FC chooses
to outsource rather than sell the database there are obligations,
from a data protection perspective, on both St. Cuthbert's FC
(which remains the data controller) and the third party (which will
be a data processor).

Therefore in the outsourcing contract it is necessary to
establish that:

St. Cuthbert's FC is permitted under the software licence
to outsource the database to the third party;

There is a written contract between St. Cuthbert's FC and
the third party;

The third party adheres to the Act in particular the seventh
data protection principle (encrypting the data);

All intellectual property rights remain with St. Cuthbert's
FC;

Establishes service levels;

The third party only processes the personal data in accordance
with the express instructions of St. Cuthbert's FC;

St. Cuthbert's FC is entitled to transfer the personal data
to the third party under the Act.

Liability

Data protection is an area that is taken extremely seriously in
the United Kingdom and failure to notify the ICO and the fans (data
subjects) that there has been a transfer of the data can lead to
sanctions e.g. a fine. Data controllers cannot process personal
information without a full notification to the ICO, which must be
kept fully up to date. Therefore the third party, where they are
purchasing the database, must also ensure that their notification
is up to date to enable them to use the data for the purposes that
they anticipate using it for. In this circumstance the directors,
managers or officers of a company can be personally liable where
the company commits an offence with their consent or participation
or can be attributed to their neglect.

Conclusion

What may initially seem a simple idea of getting a third party
to perform direct marketing on behalf of a sports club can turn
into a problem with serious consequences. Sports clubs would be
would be well advised to ensure that they are fully aware of their
obligations and to enter into a formal outsourcing or database sale
agreement to ensure both parties are aware of their obligations and
rights.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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The EU's Article 29 Data Protection Working Party recently published a further Opinion, which brings its data protection thinking up to date with the technological developments that have occurred in the processing of employee data at work.

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